Peabody Energy (NYSE: BTU) and Arch Coal (NYSE:ARCH) are both oils/energy companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, valuation, analyst recommendations, earnings, institutional ownership and profitability.

Dividends

Arch Coal pays an annual dividend of $1.40 per share and has a dividend yield of 1.6%. Peabody Energy does not pay a dividend.

Insider and Institutional Ownership

95.2% of Peabody Energy shares are owned by institutional investors. Comparatively, 37.0% of Arch Coal shares are owned by institutional investors. 1.3% of Peabody Energy shares are owned by company insiders. Comparatively, 1.3% of Arch Coal shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Peabody Energy and Arch Coal’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Peabody Energy $4.72 billion 0.75 -$729.30 million N/A N/A
Arch Coal $1.97 billion 0.95 $1.28 billion N/A N/A

Arch Coal has lower revenue, but higher earnings than Peabody Energy.

Profitability

This table compares Peabody Energy and Arch Coal’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Peabody Energy 4.60% 19.92% 2.74%
Arch Coal N/A N/A N/A

Analyst Ratings

This is a summary of current ratings and recommmendations for Peabody Energy and Arch Coal, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Peabody Energy 0 2 7 0 2.78
Arch Coal 0 1 8 0 2.89

Peabody Energy presently has a consensus price target of $36.25, suggesting a potential upside of 6.65%. Arch Coal has a consensus price target of $93.00, suggesting a potential upside of 9.24%. Given Arch Coal’s stronger consensus rating and higher possible upside, analysts plainly believe Arch Coal is more favorable than Peabody Energy.

Summary

Arch Coal beats Peabody Energy on 7 of the 12 factors compared between the two stocks.

Peabody Energy Company Profile

Peabody Energy Corporation is a coal company. The Company’s segments include Powder River Basin Mining, Midwestern U.S. Mining, Western U.S. Mining, Australian Metallurgical Mining, Australian Thermal Mining, Trading and Brokerage, and Corporate and Other. Its Powder River Basin Mining operations consist of its mines in Wyoming. Midwestern U.S. Mining operations reflect the Company’s Illinois and Indiana mining operations. Western U.S. Mining operations reflect the aggregation of the New Mexico, Arizona and Colorado mining operations. Australian Metallurgical Mining operations consist of mines in Queensland and New South Wales, Australia. Australian Thermal Mining operations consist of mines in New South Wales, Australia. Its Trading and Brokerage segment engages in the direct and brokered trading of coal and freight-related contracts through the trading and business offices. Its Corporate and Other includes selling and administrative expenses, and corporate hedging activities.

Arch Coal Company Profile

Arch Coal, Inc. is a coal producer. The Company is engaged in the production of thermal and metallurgical coal from surface and underground mines located throughout the United States, for sale to utility, industrial and steel producers both in the United States and around the world. The Company operates mining complexes in West Virginia, Kentucky, Maryland, Virginia, Illinois, Wyoming and Colorado. The Company’s segments include the Powder River Basin and Appalachia. The Powder River Basin segment includes operations in Wyoming. The Appalachia segment includes operations in West Virginia, Kentucky, Maryland and Virginia. The Company also sells coal from operations in Colorado and Illinois. Powder River Basin consists of Black Thunder and Coal Creek mines. The Company’s mines in Appalachia include Coal-Mac, Lone Mountain, Mountain Laurel, Beckley, Vindex, Sentinel and Leer. The Company operates, or contracts out the operation of approximately 10 active mines in the United States.

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